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U.S. Dollar Rebounds in Early Trading

Daily Analysis - 14/04/2017

Trump Comments Lose Sting

The U.S. dollar has been gaining since Thursday against a basket of major currencies, after investors saw value drop off on Wednesday. The big sell-off in the greenback came in wake of comments from President Donald Trump that the currency was getting “too strong,” and that he would prefer low interest rates.

Geopolitical Strife Could Cap Upside

After shedding 0.60% on Wednesday - its largest one day drop in over three weeks - the dollar recovered, rising 0.30% on Thursday.

Trump's latest remarks were a striking deviation from the long-standing practice of both Republican and Democratic administrations refraining from commenting on Federal Reserve policy decisions. It is also highly unusual for a president to comment on the value of the dollar.

However, any dollar rally is likely to meet resistance from the escalating geo-political tensions, which has seen investors again retreat to the safety of gold, yen and the Swiss franc.

The U.S. dropping “the mother of all bombs” in Afghanistan on Thursday appeared to reinforce the safe haven trade. EURUSD is falling on Friday, with the pair last seen below 1.06100.

New Home Prices Rise in Canada

New home prices in Canada rose in February, driven largely by higher rates in Toronto, Statistics Canada said Thursday. The report is likely to further trigger concerns that some real estate markets in the country are becoming too hot.

Prices gained 0.40% month-on-month in February, easily topping the consensus economists' forecast for a gain of 0.20%. Compared to the same period last year, prices surged 3.30%, the fastest rate of growth since June of 2010. Toronto recorded a 1.00% rise on the month amid improving market conditions.

The price acceleration there has prompted some economists to say the city's property market is in bubble territory. The Bank of Canada had warned Wednesday that speculative forces were at work in Toronto.

USDCAD is largely unchanged on Friday around 1.33300.

Swiss Producer and Import Prices Surprise

Producer and import prices in Switzerland rose at a faster than expected pace in February, according to data released by the Federal Statistical Office on Thursday.

Producer and import prices increased 1.30% year-over-year in March, versus the 0.90% rise that economists had forecast. On a monthly basis, producer and import prices edged 0.10% higher in March, broadly in line with the consensus expectation.

Producer prices gained 0.40% annually in March and went up by 0.10% from the previous month. Import prices increased 3.20% yearly and by 0.10% month-on-month.

USDCHF bounced off a one week low in the previous session, and is up in early Friday trade. The pair was last seen hovering around 1.00500. Overhead resistance should come in at 1.00700.

Mining Production Rises in South Africa

South African mining production increased 4.60% year-over-year in February, following the upwardly revised 1.40% gain in January, and convincingly beating market expectations of a 2.00% expansion.

The growth in February was the biggest since September of 2016, and was boosted by rise in production of platinum (47.20%) and iron ore (20.90%).

Output however fell for coal (-9.40%) and gold (-16.80%). On a monthly basis, mining sector production was up by 2.90%, compared to an upwardly revised 2.10% rise in January.

USDZAR hit a three month high earlier in the week. However, bullish momentum waned and the pair got hammered to the support around 13.39900. USDZAR is down early Friday, as bears continue to dominate in a thin session of trade.

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